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Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.Home > Blogs > A Matter of Opinion > Archives > 2009 > March > 06 > Entry
Ellen Belcher: Community organizers had it right
When Barack Obama was running for president, some opponents dismissed his experience as a community organizer, questioning the value or importance of that work.
Besides the fact that community organizers now have one of their own in the White House, there’s another reason these folks who work on the street, trying to help families and neighborhoods, are looking pretty smart these days.
With a very few regulators and even fewer honorable Wall Street money-changers, they were among the first to predict that the predatory lending that was decimating neighborhoods was going to bring down more than poor families.
Community organizers saw that subprime lenders weren’t just ripping off gullible, low-income consumers. They understood that bad loans that were never going to be repaid were being bundled and bought by investors — from banks to hedge funds to your pension fund — who had no idea what they were purchasing.
They knew those “toxic assets” that Washington now wants to put in a “bad bank” — what great oxymorons — were based on inflated appraisals that encouraged people to use the equity in their homes as if it were a pot of gold.
Community organizers don’t often have degrees in high finance, but they did recognize a house of cards.
Some of them tried to blow the whistle by documenting the scale of what was happening in neighborhoods. But they were dismissed.
In 2004, Jim McCarthy, the head of the Miami Valley Fair Housing Center, gave a briefing on predatory lending in Dayton to U.S. Rep. Michael Oxley, then chair of the House Financial Services Committee. At the behest of U.S. Rep. Mike Turner, he and others argued that lenders’ financial model wasn’t sustainable and that big institutions were going to get creamed.
More recently, Turner has asked McCarthy if he feels like an “oracle.”
Turner, incidentally, was one of just seven Republicans in the U.S. House of Representatives to vote last week for legislation that would give bankruptcy judges so-called “cram down” authority to rewrite the terms of mortgage loans, including reducing principal or extending the life of the mortgage.
Lenders complain that the option would encourage people not to pay their mortgages and to file for bankruptcy, thereby driving up costs for responsible borrowers.
Supporters of the idea, however, argue that until the foreclosure crisis is dealt with, the economy will keep reeling. Moreover, they note that bankruptcy judges already can reduce the principal for loans on commercial property, second homes, cars and boats, so why not for primary residences if that’s what it takes to stop the real estate slide?
Because of Montgomery County’s huge number of foreclosures — it and Cleveland have been among the hardest hit areas in the state— Dayton has developed some genuine authorities on the subject. Turner has had McCarthy testify before Congress twice. McCarthy points to others who’ve worked tirelessly, including Stan Hirtle of Advocates for Basic Legal Equality; Beth Deutscher, of the HomeOwnership Center of Greater Dayton; attorney Charles Roedersheimer; and Richard Stock, of the University of Dayton’s Business Research Group.
At the state level, Bill Faith at the Coalition on Homelessness and Housing in Ohio has trenchantly exposed Republican and Democratic ignorance on the depth and implications of the foreclosure crisis in Ohio.
Aided by these people and others, Democratic state Rep. Mike Foley, of the Cleveland area (and a UD grad), is proposing legislation that would mandate a six-month time-out on foreclosures in the state and give common pleas judges “cram down” authority when considering foreclosures. (The federal legislation applies to bankruptcy judges.)
While his proposal is controversial and raises prickly constitutional questions, the contrast between the Ohio Bankers League testimony on the bill and that of Paul Bellamy, who directs the Cuyahoga County Foreclosure Prevention Program, was stunning.
The bankers have no suggestions about what to do. They just know what’s wrong with others’ ideas and point to the laws Ohio already has to regulate lenders. But if they worked, we wouldn’t be in this mess.
Bellamy’s chronicle of how the process is stacked to force foreclosure even when it’s not in a lender’s financial interest — though servicers of loans make out — is a case study in craziness.
Lest anyone think Bellamy is just a liberal community organizer on an ideological toot, he cites a speech by Federal Reserve Chairman Ben Bernanke, in which Bernanke says pretty much the same thing.
In the words of Bellamy, Ohio is in a “wealth-destroying crisis of unprecedented proportions.”
Lenders got us where we are. Maybe the community organizers can help get us out.
Permalink | Comments (7) | Post your comment | Categories: Columns, Ellen Belcher, National Politics, Ohio politics, Predatory lending
Comments
By CU
March 7, 2009 7:52 AM | Link to this
Ellen, Let’s not forget that you are a jounalist and not an economist. Many economists and folks who know what they are talking about predicted the housing crisis years ago. Have you had discussions with bank presidents or mortgage lenders? As someone who has been in the business for over 20 years I can tell you there was an alarm raised when the fair housing bill, led by none other than Democrats in the 90’s forced banks and lending institutions to make mortgage loans based on quotas, not eligibility. Clever Democrats in the senate like Barney Frank used class warfare and populus rhetoric to create this situation and are far more responsible for the problem than the constantly demagogued banking industry. This crisis did not just happen over the past 8 years. I can’t seem to get past the amount of liberal propaganda you and your failing ilk publish each and every day. Your transparent, one sided effort to support your main man Obama and the far left wing Democrat party will be your ruin. Unchecked Democrat control of government is sadly turning our great country into a sad, Socialist state. Do your readers realize that John F Kennedy would be a fairly moderate REPUBLICAN if he were alive today? The founding fathers did not intend for everyone to have a vote. It certainly seems cold, harsh and insensitive…but now we are seeing why.By davidss2
March 7, 2009 6:13 PM | Link to this
http://www.foxbusiness.com/video-search/m/21910345/non-profit-pickets-for-foreclosure-victims.htm shows the thinking ability of the ACORN types about rights and other people’s money. Remember these are the same ACORN types who picketed to demand banks give loans to people not qualified years back… DUH.By tg
March 7, 2009 11:58 PM | Link to this
I’ve had the privilege of working with Jim McCarthy on a local board and am continually amazed by the depth and breadth of his knowledge on this foreclosure situation. Beth Deutscher and the counselors at the HomeOwnership Center met 1000 clients last year alone. Most have been in their homes for decades and are in foreclosure because of a medical crisis or loss of employment…they are not first time home buyers buying more house than they can afford. CU - most of the bad loans were not made by banks covered by CRA regulations. Ellen has her facts straight and they aren’t liberal ones. The bottom line is a lot of mortgage brokers were getting commissions and fees while their bosses either looked the other way or strongly encouraged their behavior. I don’t know of any law the Democrats or Republicans signed that told these institutions to falsify income or use bogus appraisals. Greed knows no party affiliation.By bobby
March 8, 2009 10:11 PM | Link to this
tg, It take two to tango.The borrowers are the beneficiaries of the of liar loans and inflated appraisals until the payments must be made. Many predicted an ugly outcome when the minimum criteria for a mortgage loan was a pulse.By bobby
March 9, 2009 12:51 PM | Link to this
tg, Here is a concept. You borrow money, you pay it back.By Mark Schmidt
March 11, 2009 2:15 PM | Link to this
Before you put the entire blame for the mortgage crisis on the lenders you may want to do a little research. The Carter administration created the Community Reinvestment Act. The Clinton Administration pressured Fannie Mae into lowering standards for borrowers obtaining loans. The Bush administration had it’s chance to better regulate this industry, but failed to do so. I would place more of the blame at the feet of our wonderful politicians who now want to spend more of our tax dollars on social programs. These same politicians are quick to chastise the banking industry without accepting any of the responsibilty which is clearly theirs.By Patty
March 12, 2009 8:39 AM | Link to this
New York Times Sept 30, 1999. “Fannie Mae, the nations biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income income people and felt pressure from stockholders to maintain its growth in profits.” Any attempts to regulate and stop the problem prompted Barney Frank to call them racists and hated the poor. You can see it on all C-SPAN videos. For evil nasty man. Then there was “community organizers” that went to banks, interrupted meetings, called them racists and got in their face until the bankers weakened and gave the loans.